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General Dynamics (GD) is a manufacturer of escalators.
Which of the following cash flows should be included in the Operating Section of GD's statement of cash flows under US GAAP?
Match the cash transaction to the appropriate category.

Items:
SALE PROCEEDS FROM EQUITY INVESTMENTS, INTEREST EARNED IN CASH, SALE OF INVENTORY, CASH PAID TO BUY A NEW FACILITY, CASH RECEIVED IN SALE OF EQUIPMENT, CASH PAID FOR INTEREST, CASH RECEIVED FROM LOAN MADE TO ОТHERS, REPURCHASES OF COMMON STOCK, PAYMENT TO SUPPLIERS, CASH DIVIDENDS PAID TO SHAREHOLDERS

Category:
a) Cash flow from operating activities
b) NOT a cash flow from operating activities

Respuesta :

Answer:

Cash flow from operating activities:

Interest earned in cash

Sale of inventory

Cash paid for interest

Payment to suppliers

Not a Cash Flow from Operating Activities:

Sale proceeds from equity investments

Cash paid to buy a new facility

Cash received in sale of equipment

Cash received from loan made to others

Repurchase of common stock

Cash dividends paid to shareholders

Explanation:

The items categorized under operating cash flows relate to transactions in the normal course of business while items grouped as non-operating cash flows items either relate to investment or financing activities of a firm.

For instance, sale of inventory would normally occur in the business day t day activities,as well as payments to suppliers.

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